Indaba Debates the Future of African Mining

As this edition of E&MJwas going to press, the annual Investing in African Mining Indaba was getting under way. E&MJ will carry a full report in the March 2013 edition, but suffice it to say the dialogue had taken on a new sense of urgency in light of the Marikana tragedy and the reforms that the mining sector will see in South Africa and sub-Saharan Africa. Last year’s nationalism and anti-mining rhetoric has given way to whether Africans can change the business model quickly enough to remain competitive.

Susan Shabangu, minister of mineral resources for the Republic of South Africa, spoke about the transformation her country has made and reminded the audience of the remnants of its historical legacy, a migrant labor system, poor housing and living conditions, high levels of illiteracy, and low skills levels. All of these, she said, inevitably contributed to the Marikana tragedy. Shabangu warned the country could not afford for this to happen again. Similar to many other African nations, the South African government is currently reviewing its legislative framework for mining.

An anti-apartheid activist and successful business-woman, Dr. Mamphele Ramphele, criticized the African National Congress. She said South Africa has no choice but to make a fresh start. Ramphele said that black elites have become part of a closed patronage system. Both Ramphele and Shabangu made reference to Dutch Disease when speaking about the South African economy, but that’s an eco-nomical debate that may or may not hold water. Ramphele took it a step further by suggesting the mining business be restructured and clustered with other business-es, such as agriculture and manufacturing.

Mining code changes pose a competitive threat for Africa. Mark Bristow, CEO, Randgold Resources, explains that, while Africa has the advantage of great mineral wealth, its competitors generally had better infrastructure, greater skills pools and more sophisticated economies. The host country, he explained, is already a signifi-cant if not the main beneficiary of its mining activities. Bristow is disturbed by sub-Saharan countries that want more from the mining industry without giving anything back. Even a moderate change in their mining codes will diminish these countries’ ability to compete for direct investment, Bristow said. The governments of these countries need to participate in the value creation process.

Making what will likely be her final appearance as an Anglo American executive, Cynthia Carroll echoed the challenges facing South Africa: poverty, unemployment and inequality. She reminded the audience that mining lies at the heart of the South African economy. She said the country has to recognize four essential truths before it will become successful: there is no future for any society without law and order; anarchy in the workplace benefits no one; modern businesses operate in a compet-itive global market; and long-term stability will ultimately attract foreign investment.

The South African mining business forms the bedrock to which emerging African mining sectors are anchored. And, last year, the leader stumbled. Weaknesses where exposed before the entire world. How the country and the other sub-Saharan nations handle the situation will ultimately determine their fate. Will they take control of their destiny or will a business-as-usual attitude prevent them from solving the prob-lems they face?

Steve Fiscor, Editor-in-Chief, E&MJ

As featured in Womp 2013 Vol 02 -